Date Requested:February 13, 2013
Time Requested:03:27 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2013R1145 Introduced HJR16
CBD Subject: HOMESTEAD EXEMPTION INCREASE
FUND(S)
General Revenue Fund, local governments
Sources of Revenue
General Fund,Other Fund Local Property Tax Revenu
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    The stated purpose of this resolution is to increase the homestead exemption from $20,000 to $25,000 on July 1, 2015 and then, on July 1, 2016, to $30,000.
    
    The increase to $25,000 in 2015 would result in a revenue loss of $9.4 million for local levying bodies and an increase of $160,000 in General Revenue Fund collections. The increase in 2016 from $25,000 to $30,000 would result in an additional revenue loss of $8.3 million annually for local levying bodies and an additional increase of $170,000 in General Revenue Fund collections. The number of senior citizens is expected to grow by nearly 37 percent over the next decade. Homestead Exemption costs will rise in similar fashion over the next decade.
    
    In most counties, decreased tax revenue due to an increase in the Homestead Exemption would likely be at least partially offset by higher tax rates and tax burdens on other types of property, including both real property taxes and personal property taxes on vehicles, business inventory, machinery and equipment.
    
    There would be a one-time cost of $20,000 to the State Tax Department for programming changes and changing and printing the Homestead Exemption forms. There would be no additional costs to local governments.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2013
Increase/Decrease
(use"-")
2014
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
    The increase in the Homestead Exemption to $25,000 in 2015 would result in a loss of $9.4 million in local property tax revenue. General Revenue Fund collections would increase by $160,000 as the $40,000 decline in State property tax revenue would be offset by a gain in Personal Income Tax collections. The further increase in the Homestead Exemption to $30,000 in 2016 would result in a additional loss of $8.3 million in local property tax revenue. General Revenue Fund collections would increase by $170,000 as the $30,000 decline in State property tax revenue would be offset by a gain in Personal Income Tax collections. As the level of the Homestead Exemption rises, the number of taxpayers who owe property taxes on their home declines. Therefore, the cost of the refundable property tax credit against Personal Income Tax liability for lower income households would also decline.
    
    These estimates are based upon the assumption of no tax rate changes on the part of county commissions, municipalities and voters. In most counties, decreased tax revenue due to an increase in the Homestead Exemption would likely be at least partially offset by higher tax rates and tax burdens on other types of property, including both real property taxes and personal property taxes on vehicles, business inventory, machinery and equipment. Twenty county commissions, numerous municipalities (e.g. Charleston), and thirty-four school boards (excess levies) currently impose tax rates below their allowed constitutional caps. Some of these authorities may raise tax rates to partially offset any local revenue loss.
    
    There would be a one-time cost of $20,000 to the State Tax Department for programming changes and changing and printing the Homestead Exemption forms. There would be no additional costs to local governments.
    


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov